Pandenomics: the deadly Italian mix of unprepared healthcare, closures and welfare
2020 will certainly be remembered as a unique year in the history of humanity. The various global lockdowns to counter the first wave of the Covid-19 pandemic caused the most severe economic contraction in modern history. Unlike in the past, it was not a structural shock to the economy, i.e. caused by endogenous factors, but by an exogenous factor such as the spread of a virus. So, with a partial and gradual reopening of economic activities in the summer we witnessed the so-called "V" recovery, which actually collapsed again with the arrival of the second wave and subsequent new closures in many countries.
France, Spain and Italy are the countries that most of all in Europe have responded to the second wave in a superficial, slow and above all non-preventive manner: since last summer the alarms were in place, but politics (both nationally and locally) ), did not deploy tools aimed at increasing the resilience of the health sector, for example by expanding the staff in charge of first aid for patients suffering from Covid or by enhancing local medicine. We soon ended up making this situation burden further on the citizens, "guilty" of having led a lifestyle during the summer season considered contemptuous of the situation in their country, but in reality completely normal: holidays, restaurant, aperitifs, etc. All activities that contribute to the GDP of a country, especially the Italian one, and that allow the state to receive the tax revenues necessary to continue to maintain an extremely expensive and not very productive public sector.
Despite the monetary instruments that Europe has sought and is trying to implement, from the ECB shield to the elusive Recovery Fund , Italy has once again lost the opportunity to be far-sighted, resorting to very partial instruments of assistance to categories most affected by the lockdown (traders, restaurateurs, hoteliers, tour operators, etc…). These measures, however, either collided with the slowness of the Italian bureaucracy or, worse, with the inadequacy of the resources allocated.
The suspension of the payment of taxes and bills should have been one of the first measures to be adopted already in the spring, and INPS should have equipped itself with especially digital and technological tools to better process the practices for the disbursement of non-repayable credit and of the redundancy fund. Pending the promised resources of the Recovery Fund , the challenge now would be to prepare a serious and ambitious infrastructure plan, which is the only healthy reason for increasing public spending and the debt-to-GDP ratio. Thanks to infrastructure plans, in fact, it is possible in the short term to reduce unemployment, and in the long run to have a positive effect on GDP growth, with a consequent reduction in the debt ratio. Furthermore, anyone can see that Italy absolutely needs an extensive reconstruction plan for its infrastructure, just look at the images of recent days in Sardinia or Calabria, devastated by various natural disasters.
The thing that must be borne in mind, as Giulio Tremonti recalls in his book "Security Exit" , is that in the current European system there are very strong instabilities, it is like being in a video game: a monster arrives, you beat it, you move up to the level next, but an even bigger monster arrives to beat. The solvency of our debt (launched towards 160 per cent of GDP) will not be able, in the not too distant future, to be guaranteed only by purchases from the European Central Bank. Brave fiscal shocks at an endogenous level by the various Eurozone countries will be needed. As Mario Draghi recalled in his last public speech at the Rimini Meeting this summer, the only true condition of debt solvency must be dictated by the positive perception of the debt contracted by international investors: if the debt is positive, i.e. invested in research and infrastructures, then it can be continuously refinanced at increasingly lower rates, if on the contrary the perception of the debt contracted will be negative, i.e. if it is perceived (as it currently is) as a debt that gangrens a welfare system and not aimed at investments, then its solvency is likely to fail.
Italy is trapped by welfare programs such as citizenship income, by a public health system that as we see is not the flagship that many expect, at least not uniformly throughout the national territory, from the policy of bonuses that burns billions, from an anachronistic and inefficient welfare state. The much vaunted “Italy model” is not praised by anyone abroad (see also Federico Rampini on the subject). We must enter into the logic that all these pseudo rights do not actually offer the true right: the right thanks to which future generations can have a better life than the present one, the right to work.
Italy was built on the spirit of big industry: we build our future, it is not given to us. But we are proceeding in the opposite direction.
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This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL http://www.atlanticoquotidiano.it/quotidiano/pandenomics-il-micidiale-mix-italiano-di-sanita-impreparata-chiusure-e-assistenzialismo/ on Fri, 04 Dec 2020 05:03:00 +0000.